Guest Commentary | Short-term health plans: Playing roulette

Guest Commentary | Short-term health plans: Playing roulette

By THOMAS O'ROURKE

Would you like to buy a big, new, cheap flat-screen TV that gets only one station or an inexpensive smartphone that only receives calls but cannot make calls? Probably not.

Fast forward to health care. After failing to repeal the Affordable Care Act, aka Obamacare, and touting the affordability of short-term, limited-duration health-insurance policies, the Trump administration is considering new rules to loosen regulations governing health plans by expanding the availability of short-term, skimpy, bare-bones policies.

These policies were originally intended for individuals between jobs or needing temporary coverage. Currently, short-term coverage is limited to less than three months.

The proposed rule would expand that to less than one year. Consideration is also being made for coverage to be renewable.

These policies would be less expensive by not requiring plans to include the more-comprehensive benefits required for ACA plans, such as preventive services at zero cost sharing, prescription drugs, maternity care, and mental-health and substance-abuse services.

Unlike ACA plans, short-term plans would not have to provide pre-existing-condition protections and could charge higher premiums or deny coverage altogether.

Whereas the most popular ACA silver plans typically cover about 70 percent of health care costs, the new short-term plans would cover about 50 percent of the costs while providing fewer benefits.

Expansion of these "stripped-down," short-term insurance policies would expand the prevalence of underinsurance by failing to provide adequate financial protection in the event of illness or injury.

Expanding short-term health-insurance policies would not only affect the policyholder but also others with standard plans.

How? Eliminating the financial penalty beginning in 2019 for not having health care coverage and this likely increase in the availability of more affordable short-term policies will attract younger and healthy people who feel they do not need the broader benefits provided by the ACA.

Removing this group from the ACA risk pool would result in market segmentation and adverse selection, with those remaining being less healthy and facing higher premiums and plans being less affordable. The result would be an increase in the number of uninsured.

Short-term health-insurance policies defeat the essence of insurance that requires a healthy pool of enrollees to cover those less healthy.

It is well-known that in any given year, about 20 percent of enrollees account for 80 percent of the costs.

Simply said, removing healthy people from the pool raises the cost for those remaining.

Not only would short-term polices raise the cost for those having ACA coverage, it also would result in increased spending by the federal government, since it subsidizes premiums for most people buying insurance in the marketplace.

When premiums rise, so do the subsidy payments.

The Trump administration estimates that several hundred thousand people might sign up for short-term limited duration polices that would cost the government $96 to $168 more a year for each.

However, a study by the independent Medicare's chief actuary estimated that 1.4 million people would sign up in the first year, increasing to 1.9 million by 2022. That would increase federal spending by $1.2 billion next year and $38.7 billion over 10 years.

Hundreds of health care and advocacy groups, including the American Cancer Society, American Heart Association, American Lung Association, Susan G. Comen Foundation and AARP have submitted comments on the administration's efforts to relax restrictions on STLD health plans, with more than 98 percent critical of or opposed to the plan.

Nor has a single group that represents patients, hospitals, physicians or nurses voiced support for the plan.

Similarly, many in the health-insurance industry voiced concern that loosening rules will further destabilize an already shaky health-insurance marketplace.

Sandy Praeger, a former Republican state insurance regulator in Kansas and former president of the National Association of Insurance Commissioners, summed it up by saying, "Basically, anybody who knows anything about health care is opposed to these proposals."

The Trump administration's proposal to expand short-term, "stripped-down," bare-bones, skimpy health-insurance plans confirms that the president was right when he said, "Never knew that health care was so complicated."

Thomas O'Rourke is professor emeritus of community health at the University of Illinois.

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